David Hargreaves reviews 2020 - a year that proved to be anything but the 'stable and boring' one he was looking for

David Hargreaves reviews 2020 - a year that proved to be anything but the 'stable and boring' one he was looking for

I was reminded recently in cheerfully abusive terms by my colleague Gareth Vaughan of a headline I had, in a fit of madness, chosen for a ‘scene setter’ article I penned in January this year.

“Here’s hoping for a stable and boring 2020", I had said, in a way that any confirmed pessimists would have immediately decided had condemned us to a year of the very opposite nature.

Colleague Gareth suggested if I was intending to proffer any views on next year, I might like to headline it: “Here’s hoping for chaos”.

But, darn it, I shall not be beaten. So, as I turn to a review of this year – and then in a subsequent article look ahead to next year - I will wish for better things and to heck with the consequences!

This year then. What a year.  I did something last New Year’s Eve I had not previously done, and that was spend it in Auckland. And I spent it with a lot of people. I braved the masses in Queen Street. Then I braved the masses inside the SkyCity casino (dropping an unfeasibly large sum of money in a surprisingly short space of time). Upon re-emerging empty-pocketed I then braved the by-now even more massed masses in Queen Street. Finally, I took refuge in the refined climes of Bowen Avenue above central Auckland, with commanding views of the madness.

One to remember - or never forget

There’s been plenty of New Years Eves I haven’t really remembered at all (ahem!) But I will always remember the eve of 2020, because the memories carry that whole sense of: “Oh, if we all only knew what we were about to walk slap, bang into.”

Sometimes, of course, it is better to NOT KNOW what is coming and how bad it might be. That can help you get through it.

And how have we ‘got through it’ so far?

If I were to sum up this country’s response to Covid, I would say this: We were hopelessly unprepared, we made all sorts of mistakes along the way and at times we stumbled ahead. The Government made instinctive decisions that proved to be right, (well in my view anyway) and we (“team of 5 million”) got in behind those decisions and scrambled really effectively, learning lessons and adapting as we went. It was ‘kiwi ingenuity’ to use that old term, almost.

We had luck though. Plenty.

Our fighting spirit came through

The upshot is that as 2020 comes to a close, we can reflect that tough as it was we’ve fought through it well. We are in so much better shape than so many places and in way better shape than ever seemed possible in those alarming days of March.

Then really anything seemed possible, even an outright 1930s-style depression.

Economists did their best undertaker impressions, giving ‘best guess’ estimates of how bad things might be, but mostly conceding that their guesses were as good as the next person’s in such a volatile and unpredictable environment.

The key thing was always going to be how bad unemployment would get. Some economists went so far as to tip double-figure unemployment.

But all through March and April the stimulus was poured in by the Government and the Reserve Bank.

Clearly, it reassured people – and let’s face it back in March people needed reassurance.

So, what are some of the key things that got us to the position we are currently in?

We managed to knock back the virus (I confess, I didn’t think we would be able to) – to the point where the economy has been ‘open’ for much more of this year than the experts were projecting at the time we went into the Lockdown Major in March.

We came out of lockdown happy to spend money. This was a big surprise to me and while economists expected some ‘letting off of steam’ I think they too have been very surprised at the way the willingness to spend has endured. The fact that far fewer people did lose their jobs than earlier expected helped a lot.

We kept people in work

And yes, about that – far fewer people lost their jobs than was earlier expected. The wage subsidy and measures such as the mortgage payment ‘holiday’ looked as though they might merely delay the inevitable. But, in reality they appear to have bought time – time during which conditions improved. The fact that people then came out of lockdown willing to spend money helped keep the economic wheels turning and helped keep people in their jobs.

So, points two and three above fed into each other nicely. Virtuous circle and all that.

And then there have been exports. These have held up really well notwithstanding the various difficulties that have been caused by border closures. Among the various commodities, the global dairy prices have remained reassuringly stable.

Just on unemployment and why it has not been anything like as bad as thought. One of the things that did surprise, no, actually shock, me as I wondered around town after lockdown was how many places I saw that advertising for staff. Didn’t expect that at all. It suggests to me that while an official unemployment figure of just over 4% pre-lockdown painted a strong, but not full, employment picture, the reality is there may have been a fair bit more work available – for the right people – than official statistics suggested. In other words we may have had more ‘capacity constraints’ in our labour market than was officially recognised before the Covid crisis hit.

The significance of that of course would be that skilled people losing jobs in areas like tourism were therefore quickly getting snapped up for new jobs and perhaps these new jobs were jobs that hadn’t been advertised as such because the ‘right’ people were not seen as being available. 

Hey, big spenders

On the willingness to spend that we’ve seen, I do find it intriguing. Where has the money come from? Earlier in the year the thought would have been that businesses selling essentials like food would have continued to do okay, but a shop selling something like furniture for example, well, no. Who’s going to buy a new lounge suite during a pandemic? Well, refreshingly large numbers of people did.

What happened then? Has the willingness to spend come from a sort of “oh, to heck with this, we’ve been locked up, pushed around, scared of this darn virus, life is worth living, let’s spend!” Or have we actually been underestimating just how much Kiwis spend offshore in ‘normal times’ on their annual holiday getaways? I suspect that there’s been a rather bigger well of money there to draw on than we might have thought.

Anyway, wrapping all this together – it has been a traumatic year, but as a country we’ve come through it much better than might have been expected. Heck, we’ve even managed to create a new housing crisis. Life must be returning to normal!

And providing we can keep our borders secure against an increasing wave of Covid internationally, we should be able to enjoy a relaxing summer at home and celebrate the end of a year we will be happy to see the back of possibly in the same way this cursed year was brought in – with crowds of non-socially distanced people gathering in Queen Street and the like. Er, but I think I’ll be skipping it this time around.

Then there’s next year. I’ll be back next week with my thoughts on that. And yes, I will be hoping for something better – and I’ll say that! Let’s leave the chaos with 2020!

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14 Comments

12
up

Happy new year. We are truly fortunate to be able to focus domestically on items other than the pandemic. I coached junior sport this year and we are probably one of the only countries where that happened this year.

@nktokyo the financial repercussions of 2020 will come in with a great delay. Possibly early 2022. Enjoy these 'good' times when they last. I honestly mean that.

So far it looks like elimination was the best policy. Containing an air borne virus is incredibly difficult especially with so many people bringing it over every day, it has been an amazing achievement although I agree a lot of luck involved.
I think the NZ economy is often more relative than absolute - if the world is doing badly and we are doing less badly then we seem to keep buying and employing and feeling good.

JJ
Using the USA as a comparative measure; NZ's death toll would now be just over 4,300, Covid would not be under control with the number of cases and deaths would still rising rapidly and not yet peaking.
Albeit having a few advantages (isolation, the ability to readily close borders and a smaller population) we clearly have done far better - and the USA has had some Covid with measures in place and suffered economic consequences. This is largely due to a lack of US decisive leadership and undermining recommended strategies.
Other than issues related to housing, agreed, "if the world is doing badly . . . we are doing less badly".

What a very wild ride this year... let's hope for a stable and boring 2021

10
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2020
★☆☆☆☆
Very bad, would not recommend.

For those who maintained their jobs, businesses or incomes, 2020 was quite good financially & better for savings with no overseas travel or other spending.
But are we ‘prospering’ inside a false QE Bubble?

Except for anyone saving for a house. Almost every one of them would be further from the deposit than they were a year ago.

JJ
. . . and don’t forget retirees seeing the return on their term deposit nest egg being halved.

2020 was a fantastic year!
Would never have finished building New Zealand’s first electric helicopter (and the first helicopter in the world with a fully electric tail rotor) if it hadn’t been for Covid.

2020 was the start of the end of the financial system. NZ and Australia may think that it will all continue as before with the banks lending into existence to speculate on houses. This is how backwards the discussions are. People's thinking is generally lazy and this extends all the way to the top and among our business community.

In a way, this tiny nation showed the world that anglosphere could manage covid19 successfully. It upset some CCP supporters tho : )

" Or have we actually been underestimating just how much Kiwis spend offshore in ‘normal times’ on their annual holiday getaways? I suspect that there’s been a rather bigger well of money there to draw on than we might have thought"
I'd add to that there may be a vast over estimation to the value to the economy of incoming tourists. Perhaps much of the money coming in is immediately repatriated having been spent at overseas owned business if it ever got here in the first place as. Opposed to circulating in our economy.

Or could it be that the doom and gloom Covid predictors were like Rachel Carson and her pack of lies, "The Silent Spring". The predicted events were never going to happen and the "unexpected" better position was always going to happen, and a surprising number of people ignored the lies, and positioned themselves to profit from events, which with the benefit of hindsight. were always going to pan out the way they have done, are doing, and will do.